US equity funds continue to attract heavy inflows, but a Bank of America strategist is flashing a warning sign and advising investors to stay cautious.
The latest BofA report shows US equity funds pulled in another $39 billion in a single week, putting the annualized pace on track for a record high of $636 billion this year. At the same time, US Treasuries notched their 16th straight week of inflows, the longest streak since August 2024.
However, the BofA strategist team led by Michael Hartnett made clear that, given rising real yields, price action in AI and bank stocks, and potential market volatility from US midterm elections, they remain "risk-off" in the coming weeks. That stance stands in sharp contrast to the current strong equity inflows and sounds a warning bell for investors.
Strong equity inflows, tech leads the way
Citing EPFR Global data, global equity funds took in about $64.5 billion in the week through October 14, a broadly strong picture for flows.
All US equity style funds recorded net inflows: large caps attracted $32.5 billion, while growth, value, and small caps drew $1.6 billion, $1.2 billion, and $1.1 billion respectively, indicating relatively balanced positioning.
At the sector level, tech stocks topped the list with $10.7 billion in weekly inflows; financials and consumer stocks came under clear pressure, suffering net redemptions of $1.4 billion and $600 million respectively.
By region, emerging market equities logged a third consecutive week of inflows, totaling $17.7 billion for the week; Japanese equity funds returned to net inflows after outflows, at $400 million; European equity funds saw $1.5 billion of outflows.
Demand for safe havens rises, Treasury inflows set a阶段性 record
Even as equities kept drawing money, safe-haven assets also attracted capital, reflecting an underlying split in market sentiment.
US Treasuries took in $3.6 billion for the week, a 16th straight week of net inflows and the longest streak since August 2024. Investment-grade bonds also drew $3.5 billion, extending a steady trend. Municipal bonds recorded a 26th consecutive week of inflows, at $4.5 billion for the week.
Emerging market bonds notched an 11th straight week of inflows, at $800 million.
By contrast, high-yield bonds suffered a third consecutive week of outflows, at $900 million for the week, reflecting investors' cautious stance on credit risk.
Cash outflows, gold and crypto lackluster
On the asset allocation front, cash funds saw $53.1 billion of outflows for the week, suggesting some money is being reallocated from money markets into risk and safe-haven assets.
Gold funds posted only a modest $100 million inflow, showing relatively limited appeal; crypto funds suffered about $600 million of redemptions, a weak performance.
Bond funds overall took in $11.8 billion, a steady showing among major asset classes and one that echoes the more defensive market view of Michael Hartnett's team.
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